Unemployment continues to drop, no notable rise predicted for autumn

Registered unemployment continued to drop in August at the same rate as in July - by 0.3 percentage points, reaching 15.0% of the economically active population by the end of the month.

The unemployment decrease may slow in autumn but neither do we predict a notable rise. Although several seasonal jobs will come to an end and some of the graduates of secondary schools and colleges may register with the State Employment Agency (NVA), the registered unemployment rate compared to the NVA labour survey data does not possess a high degree of seasonality. Moreover, the term for receiving the 9-month unemployment benefits will be over for the majority of registered unemployed, since in 2009 and before the number of those who were granted unemployed status was rather high. Up to now, the opportunity to participate in the 100-lats programme represented an important motivation to maintain the unemployed status after the benefit period ran out (for more than two thirds of the registered unemployed the benefit term is currently up). In time, however, the number of those involved with the 100-lats programme will drop as the demand for labour increases in the private sector and the plan of the Welfare Ministry for restructuring of the programme is carried out, maintaining it until the end of 2011 only in certain regions or gradually reducing the amount of the stipend, which should act to lessen the motivation to maintain the unemployed status.

The number of those employed in the private sector has resumed growing as of the spring of 2010 (see commentary) and the trend of change in the number of vacancies in the NVA database has been pointing upward since spring, reaching a 21-month maximum (3.6 thousand) at the end of August. Even though the data of the European Commission survey do not point to any plans by businesses to reduce the number of their employees, businessmen are still sceptical about any plans for increasing the number of their employees in the longer term. For instance, the balance of replies by manufacturing industry entrepreneurs ("+", if they plan to increase the number of their employees, "-" if they plan to reduce it, and 0 if they have no plans to change it) has been hovering around zero for about five months. The service industries have also approached zero from deep minuses over this same period.

None of the branches of the economy, however, is expecting a sustained expansion in the number of vacancies. That could be explained by the possibility that decisions to attract new employees can be implemented without any delay because of the great number of jobseekers. The entrepreneurs' vision of the future , remains cautious, however, since the growth of new orders and output is uneven, which is evident, e.g., in the monthly changes in the manufacturing industry output, retail turnover or the amount of new orders. Another possible reason may be that jobs are created in the new enterprises, which are not participating in the EC survey whereas the number of employees in the existing enterprises is stable. This second possibility is supported by Lursoft data on the dynamics of establishing subjects registered with the Enterprise Register: new businesses are being established at a faster rate than last year.